Social Security

[Confused221]

We have always got a refund check back and the last two times we owed money. I was getting retirement from the post office and a stipend until i turned 62. I started getting social security in October of 2022. Would that be the reason why we owed money instead of receiving a decent refund. Or could I be filing incorrectly since receiving social security?

[xmasbaby0]

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. 

 What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2019 it was $17,640— for 2020 it was $18,240; for 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)  For 2024, $22,320.

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.  If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2023 Form 1040

https://ttlc.intuit.com/questions/1899144-is-my-social-security-income-taxable

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is $25,000 when filing single or head of household, or $32,000 when filing married filing jointly, $0 if you are filing married filing separately.

Some additional information:  There are 11 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont  These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

The tax laws for 2024 will change——for  tax year 2024 Missouri and Nebraska will no longer tax SS

[VolvoGirl]

Maybe.  You would have to compare each return line by line to see why.  Do you have any withholding taken out of Social Security?

Up to 85% of Social Security becomes taxable when all your other income plus 1/2 your social security, reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

[Confused221]

I do not have withholding taken out, didn’t know you were required too. When I was getting the social security stipend before I turned 62 I did not have any withholding taken out either and we got a decent refund?

[VolvoGirl]

You don't have to have withholding taken out of Social Security .  I don't.  But if you have a lot of other income it can make some of your SS taxable.  So you need to either increase some other withholding or send in estimated payments to cover it.  When you turn 65 you also get a higher Standard Deduction so that will help. 

[SusanR2]

You are not "required" to have Federal tax withheld from your Social Security.  But, since you've stated that you have other income, it seems that more of your Social Security is now taxable to you.  If that is the case, you can choose to have Federal tax withheld from your Social Security so that you don't owe at the end of the  year or have a cushion and get a refund.  Hope this helps!

[xmasbaby0]

IF YOU WANT TO HAVE TAX WITHHELD FROM YOUR SOCIAL SECURITY BENEFITS

https://www.irs.gov/forms-pubs/about-form-w-4-v